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U.S. Supreme Court Rules Credit Repair Firms Can Force Arbitration

Professor Michael W. McConnell spoke with Jim Puzzanghera of the Los Angeles Times on how arbitration can benefit both companies and consumers.

A 1996 law sought to protect struggling consumers from businesses promising to improve their credit rating, and specifically gave customers the right to sue any firm in violation.

But the U.S. Supreme Court ruled Tuesday that credit repair companies could block such lawsuits and instead force disgruntled customers into binding arbitration if they had agreed to such a provision in the fine print of their agreements.

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But Stanford Law professor Michael W. McConnell, who represented the credit card company and a bank involved in the case, said that just because arbitration is good for a company doesn't mean it's bad for a consumer.

Arbitration can be "a fast, cheap, easy, convenient way of resolving small disputes" with companies, McConnell said. And Tuesday's decision further enhances its use by re-emphasizing the high court's view that the right to sue doesn't specifically prohibit arbitration requirements.